Proving again that earnings drive the market and Kosovo's impact is ultimately as contained as the campaign itself, stock proxies stormed higher today thanks to some positive developments on the profit front.
First, rumors of preannouncements from bellwethers such as
have (thus far) proven more akin to
vulture than the albatross some feared.
Second, the hint of optimism
Tuesday night was extended by
last night and then unsheathed this morning by
Morgan Stanley Dean Witter
each made positive comments about earnings prospects.
Sure, 3Com bested lowered estimates and Micron fell 8.8% today, but they mattered little to the big picture, which looked downright rosy after four trading days where the action was mixed at best.
Dow Jones Industrial Average
rose as high as 9841.94 late in the session before closing up 169.55, or 1.8%, to 9836.39.
Procter & Gamble
led Dow gainers, while Caterpillar and
lent solid support.
Tech proxies were again the best performers, thanks both to a retrenchment of earning worries and a sense that recent selling created opportunities.
Nasdaq Composite Index
rose 69.15, or 2.9%, to 2434.43, in the ninth-biggest point gain in its history.
led the Comp, rising 5.1% to a new high of 179 15/16 amid anticipation it will settle its antitrust case with the
The rally 'sure proves that the momentum players just go on vacation from time to time but they ain't dead yet,' a veteran trader quipped.
Most other tech bellwethers notched sharp gains, notable exceptions being
. Still, the
rose 3.5% and the
Morgan Stanley High-Tech 35
Despite Intel's and Micron's lassitude, the
Philadelphia Stock Exchange Semiconductor
rose 2.7%. The SOX was paced by
and chip equipment makers such as
Internet names also scurried higher, sparked by a string of new buy ratings from
NationsBanc Montgomery Securities'
TheStreet.com Internet Sector
index rose 33.79, or 5.7%, to 627.90 while
TheStreet.com E-Commerce Index
gained 4.53, or 4.2%, to 112.13.
rose 21.33, or 1.7%, to 1289.92 as transports and retailers joined technology on the upswing. Additionally, brokerage firms soared in reaction to Morgan Stanley's blockbuster earnings report. Morgan rose 5.8%,
Donaldson Lufkin & Jenrette
gained 8.2% and
rose 6.8%, leading the
American Stock Exchange Broker/Dealer Index
higher by 5.8%.
Even small-caps joined the upturn, reflecting solidly positive (for a change) market internals; the
gained 8.59, or 2.2%, to 392.99.
New York Stock Exchange
trading, 784.2 million shares were exchanged while gainers led 1,887 to 1,048. In
Nasdaq Stock Market
activity 942.5 million shares were exchanged while gainers led 2,363 to 1,543. Still, new 52-week lows bested new highs 73 to 20 on the Big Board and by 97 to 59 in over-the-counter trading.
"I think a lot of the bargain hunters stepped into the market today," said Conley Turner, equity analyst at
Wall Street Strategies
, noting oversold conditions in semiconductor and airlines stocks. "Also, there was an inordinate amount of brokerage upgrades today, plus Morgan Stanley's earnings. These factors really added to positive investor sentiment. That's why a lot of money came off the sidelines into what investors perceived to be oversold issues."
Turner said positive momentum was also evinced by secondary names such as
, up 9%, and
, which gained 7.7%.
However, "while we have this rebound today, whether or not this can be sustained is another question," the analyst said. "The concern of earnings going forward is still out there. We feel positive in the long term but see continued volatility in the short term. This is still a traders' market."
On the Other Hand
Still, not all were impressed with the market's performance. The rogue's humor of trading desks resulted in the following quip from one market veteran: "Up 170! Tech fever, catch it!" he said. "Proof again that 'the buyers are higher.' It sure proves that the momentum players just go on vacation from time to time but they ain't dead yet."
More serious skeptics noted the lack of breakout volume, the sluggishness of tech leaders Dell and Intel, and the uptick in oil prices and subsequent bond-market reversal.
The price of the 30-year Treasury bond fell 23/32 to 95 4/32, its yield rising to 5.59%.
Others expressed chagrin the market did not continue the washout experienced
"Even before we started the climb to 10,000, the market was overvalued and there was too much optimism," said Hugh Johnson, chief investment officer at
. "It looked as though we were in the process of eliminating that but the market has to go down further to eliminate that. Then perhaps we can have a more orderly assault on 10,000."
Johnson, who has been espousing the need for a defensive stance since
Feb. 25 (at least), said he was not surprised by the market's performance, but a bit disappointed.
"I don't know if I'm forecasting or hoping for more of a correction, but it's one of the two," he said. "It would be very healthy."
Among other indices, the
Dow Jones Transportation Average
rose 83.05, or 2.6%, to 3289.70; the
Dow Jones Utility Average
slid 0.66, or 0.2%, to 304.39; and the
American Stock Exchange Composite Index
rose 8.80, or 1.3%, to 712.40.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
rose 66.21, or 1%, to 6593.52 and the
Mexican Stock Exchange IPC Index
edged up 9.71 to 4829.20.
Thursday's Company Report
Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.
As noted above, Micron Technology skidded 4 9/16, or 8.8%, to 47 7/16 even after last night posting second-quarter operating earnings of 12 cents a share, excluding a 3-cent writedown for flat panel display assets and a charge for consolidation of PC operations in Japan. Net income came in at 8 cents. The 19-analyst view called for a profit of 1 cent a share vs. the year-ago loss of 24 cents.
Meanwhile, Morgan Stanley Dean Witter behaved as it was supposed to -- and rallied after a positive earnings release. The company hopped up 5 1/2, or 5.6%, to 103 7/8 after posting first-quarter earnings of $1.76 a share, blowing away the 12-analyst estimate of $1.34 and moving up from the year-ago $1.10.
Mergers, acquisitions and joint ventures
lifted 14 1/8, or 9.7%, to 159 3/8 after setting a four-year marketing pact with
under which it will pay AOL $75 million. AOL rose 9 3/8, or 8%, to 126 1/2. Separately, eBay filed with regulators for a secondary offering of 6.5 million shares.
Still elsewhere in the sector, NationsBanc Montgomery Securities initiated coverage of a handful of Internet companies with buy ratings, including AOL;
, which jumped 16 1/8, or 13%, to 139 7/8; and
, which jumped 18 1/2, or 11.5%, to 179.
tacked on 1 to 54 3/16 on news that it and
plan to form an asset-management joint venture, merging the
groups of mutual funds. Everen Capital rose 1/16 to 20 1/8.
sprouted up 3 3/4, or 43.5%, to 12 1/2 after its
unit agreed to launch a new casino within the Playboy.com Web site. Playboy climbed 1 9/16, or 6.7%, to 24 3/4.
shaved off 1 13/16, or 10.2%, to 16 after agreeing to acquire
in a stock and cash deal value at $553 million. Norrell picked up 13/16, or 6.4%, to 13 7/16.
Credit Suisse First Boston
started coverage on Interim with a strong buy.
Mutual Savings Bank
flew 2 3/4, or 28.8%, to 12 5/16 after last night
agreed to acquire the company in a stock swap valued at $14.60 a share. Mutual Savings shareholders will receive 0.8 of an Independent Bank share for each share held. Independent Bank slouched 13/16 to 17 9/16.
Northern States Power
lowered 1 1/16 to 26 3/16 after agreeing to merge with
New Century Energies
in a stock swap. New Century dropped 2 3/16, or 5.7%, to an annual low of 36 1/2. New Century Energies shareholders will receive 1.55 shares of the merged company for each share held.
lowered Northern States Power to neutral from attractive.
O'Sullivan Industries Holdings
grew 2 5/16, or 18.3%, to 14 15/16 after last night saying a senior management group made a proposal to buy the company. The company hired
Salomon Smith Barney
to explore and evaluate options.
Earnings/revenue reports and previews
Ames Department Stores
shot up 5 1/16, or 17.6%, to 34 after recording fourth-quarter earnings of $1.46 a share, topping both the five-analyst view of $1.35 and the year-ago $1.23.
Aztec Technology Partners
tanked 1 13/16, or 47.5%, to an all-time low of 2 after last night warning it expects to report first-quarter earnings of 1 cent to 3 cents a share and 1999 earnings of 20 cents to 30 cents. The company cited tougher competition squeezing its margins, a slowdown on the cabling portion of its voice and data business unit and higher costs and one of its branches. Aztec also said it formed a strategic committee to find ways to boost its share price. A single-analyst view called for quarter earnings of 16 cents, vs. the year-ago 11 cents, and a three-analyst view called for full-year earnings of 65 cents, vs. the year-ago 60 cents.
excelled 3/8, or 10.3%, to 4 after last night reporting a fourth-quarter loss of 24 cents a share, 6 cents narrower than the five-analyst estimate but below the year-ago profit of 7 cents.
surged 2 7/16, or 10.8%, to 24 15/16 after recording fourth-quarter earnings of 45 cents a share, on target with the three-analyst forecast and a dime ahead of the year-ago figure.
declined 2 11/16, or 9.1%, to 27 after posting third-quarter earnings of 36 cents a share, a penny above the 15-analyst outlook and higher than the year-ago 28 cents.
stumbled 6 1/4, or 27%, to 16 15/16 after announcing fourth-quarter earnings of 18 cents a share, missing the two-analyst estimate of 30 cents and falling behind the year-ago 23 cents.
added 1 13/16 to 171 5/16 after
The Wall Street Journal
said the company disclosed a pretax loss of nearly $1 billion from its PC business last year, prompting renewed calls for Big Blue to exit the PC market. Separately, IBM and
Telefonica de Espana
announced a multiyear deal worth billions of dollars. Telefonica rose 2 3/4 to 132 1/4.
advanced 5/8, or 5.6%, to 11 7/8 after reporting third-quarter earnings of 2 cents a share, 6 cents below the four-analyst estimate and behind the year-ago 14 cents.
Maytag expanded 5 15/16, or 10.9%, to 60 1/4 after saying its first-quarter earnings will likely exceed current expectations and come in above 90 cents a share. The seven-analyst estimate calls for 81 cents vs. the year-ago 75 cents. The company attributed the new outlook to strong sales in higher margin items such as its
upright vacuums and large
rocketed up 14 1/16, or 70.5%, to 34 after recording fourth-quarter earnings of 51 cents a share, 2 cents higher than the 12-analyst view and 11 cents above the year-ago figure.
Pharmacia & Upjohn
tacked on 1 3/8 to 59 1/2 after saying it sees double-digit sales growth in the first quarter and high single-digit sales growth for the year. The company also expects to meet double-digit earnings growth. A 14-analyst estimate calls for first-quarter earnings of 42 cents a share vs. the year-ago 36 cents, and an 18-analyst estimate calls for annual earnings of $1.82 vs. the year-ago $1.58.
picked up 1 9/16, or 6.3%, to 26 9/16 even after saying its first-quarter sales growth will fall short of its previous year-on-year forecast of 20% to 25%. For the full year, the company expects profits to exceed 1998 levels.
Morgan Stanley Dean Witter
lowered the stock to neutral from outperform and cut earnings estimates for 1999 and 2000.
United Road Services
plunged 5 5/32, or 48.5%, to an all-time low of 5 7/16 after warning its first-quarter earnings will fall below estimates and come in around 8 cents to 10 cents a share due to mild winter conditions. The two-analyst estimate called for a profit of 18 cents vs. the year-ago loss of 8 cents.
BancBoston Robertson Stephens
lowered the stock to buy from strong buy.
slipped 1/2 to 56 3/4 after reporting first-quarter earnings of $1.12 a share, in line with the seven-analyst estimate of $1.12 and 1 cent above the year-ago figure.
Offerings and stock actions
Affiliated Computer Services
rallied up 4 1/4, or 11.7%, to 40 7/16 after postponing a 3.5 million-share secondary offering because of market conditions.
Brown Brothers Harriman
lifted the stock to short-term strong buy from buy and set a 12-month price target of 54 a share.
soared 17 5/8, or 80.1%, to 39 9/16 after last night
BT Alex. Brown
priced its 8.5 million-share IPO top-range at $22 a share. The company is an Internet service provider offering services in secondary rural markets.
jumped 7 15/16, or 7%, to 121 3/4 after Morgan Stanley Dean Witter upped the stock to outperform from neutral and set a price target of 133.
revved up 28 3/4, or 23.8%, to 150 after
ING Baring Furman Selz
began coverage with a buy.
flew 7/8, or 5.2%, to 17 9/16 after
raised it to near-term accumulate from neutral while maintaining its long-term buy.
lowered 1 15/16 to 73 1/2 after
initiated coverage at accumulate.
fell 5 1/4, or 14.8%, to 30 3/16 after Credit Suisse First Boston downgraded the stock to hold from strong buy and
dropped it to attractive from buy. The company issued a third-quarter profit warning yesterday, blaming economic weakness in Brazil.
Data Transmission Network
climbed 5 15/16, or 36%, to 22 9/16 after last night saying Chairman and Chief Executive Roger R. Brodersen resigned as part of the reconstitution of its board.
shot up 5 7/16, or 78.4%, to an annual high of 12 3/8 after late yesterday the
Food and Drug Administration
granted the company approval to market
, used to treat moderate to severe vasomotor symptoms related to menopause, such as hot flashes and night sweats.
expanded 9/16, or 34.6%, to 2 7/32 after last night saying it will close 60 to 70 stores in fiscal 1999 and that it's considering selling products over the Internet. The company also reported fourth-quarter earnings of 27 cents a share, below both the two-analyst estimate of 46 cents and the year-ago 31 cents.
surged 11 1/6, or 12.7%, to an all-time high of 98 7/16 after it and
resolved their disputes on code division multiple access technology. The companies agreed to support a single global CDMA standard and Ericsson agreed to buy Qualcomm's terrestrial CDMA wireless infrastructure business. Ericsson, bouncing back from yesterday's profit warning, lifted 2 5/16, or 11%, to 23 5/16.
tacked on 3 5/16 to 76 13/16 after naming James E. Goodwin chairman and chief executive, effective in July. Goodwin, currently president and COO, will succeed Gerald Greenwald, who is retiring.